World Gold Council confirms China has purchased 155 tonnes of gold YTD
According to the World Gold Council (WGC), China's central bank (the People’s Bank of China) lifted increased its holdings by between 23 tonnes in July and another 29 tonnes in August. That took purchases so far this year to well over 100 tonnes – 155 tonnes the largest by any central bank and probably helped the metal’s price rise 6.1% year to date.
That includes last week's dip of 1.2% to a close of $US1,946.60 an ounce last Friday’s settlement on Comex in New York. The WGC data shows that global central banks added 55 tonnes to their gold reserves in July.
The People’s Bank of China (PBoC) and the National Bank of Poland both added around 23 tonnes while the Central Bank of Turkey was again among the buyers (17 tonnes). Qatar (3 tonnes), while Singapore and the Czech Republic bought two tonnes each.
The Central Bank of Uzbekistan (11 tonnes) and the National Bank of Kazakhstan (4 tonnes) were the familiar sellers in the month. But according China's updated foreign reserve data, the People's Bank of China bought 29 tonnes of gold in August, lifting year-to-date purchases to 155 tonnes.
August’s buy was also the PBoC's biggest purchase since December, 2022. The PBoC has been the leading central bank in the gold market this year. And its current buying spree has matched its previous 10-month run that ended in September 2019.
Some economists wondered why China was buying gold when it could be using the $US10 billion or so spent in buying gold in July and August. The money spent is dead money, has helped gold sellers and dealers globally and done nothing to stimulate domestic demand at a time when such stimulation is desperately needed in China.
Quite a few western gold miners will be happy the PBoC is buying gold (It buys all its gold in offshore markets with US dollars and ships the metal to Beijing without leaving a trace in customs reports. Gold produced i China is mostly sold into the local domestic market via the Shanghai Gold Exchange.
Looking ahead, many analysts said that they expect China to continue to buy gold as it strengthens the yuan's international credibility to compete with the US dollar as the world's reserve currency. "I don't think this scramble away from the U.S. dollar is going to end anytime soon,” said Edward Moya, senior market analyst at OANDA, told Kitco.
Moya noted that while central bank demand continues to support the market, prices could continue to struggle in the near term. "What gold prices need to go higher is for global growth to slow down and bond yields to move lower,” he said.
Source: https://www.sharecafe.com.au/